Global Warming and Your Mortgage

 In Common Questions, Refinancing your Mortgage

Most people seem to realize that global warming is a real thing.  How will it affect your ability to get a mortgage?  

Here’s some info that might help.

Global Warming and Your Mortgage

The Federal Housing Finance Agency (FHFA), the US government agency that oversees Fannie Mae and Freddie Mac, the companies that purchase most of the mortgages sold in the US, are concerned that the risks posed by global warming, such as more severe storms, flooding, droughts, wildfires, etc., will negatively impact the economy and the social structure of our country.  

Earlier this year, the FHFA asked the public for input regarding their concerns and how to best mitigate those concerns.  

Effects of Global Warming on the Housing Market

Some of the anticipated negative consequences include increased foreclosures because houses go down in value or are damaged, higher insurance premiums, and increased interest rates for people living in areas most affected by global warming.

Increasing interest rates for people looking to finance a house in an area that has a higher potential to burn or flood may sound like a reasonable approach to the problem, but it would violate the fair lending laws.  Federal law requires equal access to credit for all Americans, and most of the people who live in the areas that will be affected have either low or moderate income.  Charging higher mortgage rates for people who aren’t wealthy is against the law. 

Moving Forward

It’s interesting to see that although different stakeholders, e.g., mortgage lenders, energy companies, and scientists, all suggested solutions that were in their own best interests, they all agreed that something must be done.  All of our lives, whether we work in real estate, banking, oil and gas, or any other industry, will be different as we begin to address global warming.  

It took centuries for all reasonable people to understand that the earth is not flat.  We don’t have centuries for all reasonable people to understand that COVID is real and global warming is here.  There are no proposed changes to the mortgage industry or the availability of credit at the moment, but inevitably, change will come.  If you are in the real estate or mortgage lending industries, or are interested in buying a house or refinancing the existing mortgage on your house, it would be wise to start thinking about how different political factions plan to deal with global warming.  Support the wrong people and it could affect your livelihood, your housing plans, or both.

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